As consumer demand for fast shipping continues unabated, a brand’s reputation increasingly rests on those last-mile delivery capabilities – in short, whether you can get orders out to customers more quickly than your competitors.
With customer loyalties now hinging on the desire for (near) instant gratification, speed and efficiency are of the essence like never before. For both small and large retailers, this means considering a sophisticated multi-node fulfillment strategy with the flexibility to meet consumer expectations and maximize growth opportunities for your business.
In this post, we’re going to dive into the topic of multi-node fulfillment, and the ways your operation can benefit from adopting this fulfillment strategy across retail channels.
Multi-node fulfillment refers to fulfillment infrastructure networks that are designed to cater to the needs of merchants with decentralized customer bases and/or store locations.
Rather than operating out of a single massive distribution center or warehouse, this approach makes use of extra ‘nodes’ in the form of micro-facilities strategically located in relation to key transportation networks, ‘demand hubs’ with a high density of customers, and/or major parcel carriers. This means when an order is placed, real-time warehouse management systems help providers to calculate which facility can fulfill that order in the fastest timeframe.
For example, a retailer might need a micro-fulfillment center in close proximity to customers in a specific city. Moving the fulfillment process closer to their customers speeds up delivery as well as reducing the amount of warehouse space needed to accommodate inventory, thus keeping costs lower. Moreover, because the micro-facility is catering to a more specific customer segment, retailers can be more selective about SKUs to ensure that inventory is going where it’s needed.
Using multi-node fulfillment strategies, providers are able to streamline the fulfillment process and shorten delivery times substantially, while also creating a much more cost-effective strategy for retailers.
In the past few years, the turnaround between order placement and shipping has gotten faster and faster to keep pace with consumer demand for rapid delivery times.
The impressive fulfillment capabilities of online marketplaces such as Amazon has set a new standard for what consumers consider to be ‘fast’ shipping. The trend has intensified this year due to the COVID-19 pandemic and the increased reliance on online shopping where other retail channels are unavailable.
According to the Wall Street Journal, consumers expected to receive their order within 4.8 days back in 2016. Today, it’s just 2-3 days. Furthermore, a whopping 80% of online shoppers now want a same-day shopping option to be available at their favorite retailers.
This puts a huge amount of pressure on small retailers, many of whom find it challenging to deliver within these timeframes without their profit margins taking a hit.
As mentioned above multi-node fulfillment providers work closely with customers to ensure their orders are being fulfilled at locations in close proximity to areas of high consumer demand. This ensures that delivery times are kept to a minimum and that shipping is kept as cost-effective as possible while still meeting consumer expectations.
Factoring in warehousing, order processing, and shipping costs, fulfillment can quickly become a costly business for merchants. One way to help curb some of the shipping costs is to consider a multi-node fulfillment strategy. Shipping orders from one location increases transit times to the end consumer and shipping costs, which usually are passed-off onto the consumer and can deter completion of the order. Do you have a reasonably high cart abandonment rate? High shipping costs are the leading reason for shopping cart abandonment and may be the first indication you should consider a multi-node fulfillment solution.
Keeping your inventory closer to where your customers are will help tame shipping costs, making that purchase all the more advantageous for the consumer. In addition to the cost savings, multi-node fulfillment can deliver your products faster. Customers today expect 2-day shipping, anything longer and you risk losing the purchase or crush any thought of a repeat purchase.
When you ship from only one warehouse, it can take a long time to reach your end customer depending on where they are located.
Another benefit of switching to a provider with a multi-node model is that your business can incur cost savings by gaining the ability to change between ‘nodes’ tailored to address current requirements, thus streamlining your operation and minimizing the risk of errors. Studies show that the average cost of an error within a warehouse can decrease your profitability by as much as 13%, which is a major hit to your bottom line. Furthermore, your fulfillment partner can work with you to manage seamless transitions when the time comes to adjust your strategy.
It’s no secret that sustainability has never mattered more to consumers. As the effects of the climate crisis grow more acute, consumers are looking to support businesses who demonstrate that they are doing their part to support the planet. According to Aflac, 77% of consumers say they are more willing to purchase from a company if have shown a commitment to addressing environmental issues.
By fulfilling orders closer to where your customers are located, this means less distance to travel for freight carriers to travel for delivery, thereby lowering emissions considerably.
In addition to multi-node fulfillment, Port Logistics Group has invested heavily in sustainability strategies to lower our carbon footprint across our network. This includes the use of solar power for our warehouses, sustainable packaging solutions, and automatic lighting to reduce waste and energy usage.
One of the toughest parts of being a retailer is that demand is always changing; as we move between seasons and holiday periods, the peaks and troughs associated with each make it extremely challenging to plan and execute a year-round fulfillment strategy.
Furthermore, your fulfillment needs can undergo rapid changes according to business expansion, supply chain logistics, or changing consumer behavior across retail channels. As a merchant, this necessitates the ability to pivot your fulfillment strategy when the need arises.
By partnering with a provider with a multi-node network, you’ll be much better positioned to adjust your fulfillment approach in response to the demands of your channels. For example, you can leverage the support of extra staffing for peak order periods such as the holiday season, or obtain extra warehousing space close to a pop-up store location for better accessibility to inventory.
As a nationwide fulfillment expert with 18 keystone facilities across the United States and an international network of partner facilities, Port Logistics Group is a well-resourced provider with years of experience in developing robust multi-node fulfillment strategies. With 6.5 million square feet of warehouse space available to assist merchants in bringing themselves closer to key local markets, we are on-hand to help you exceed consumer expectations.